What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-29 compared with 2024-05-02 · 266 added, 130 removed, 319 unchanged (55% of the section changed)

16 unchanged sentences

The Company allocated $4.2 billion of the $5.6 billion purchase price to the BodyArmor trademark.

As of December 31, 2023, the fair value of the trademark approximated its carrying value.

During the three months ended March 29, 2024, the operating results related to the trademark were lower than expected.

44 unchanged sentences

In May 2023, the Company acquired certain brands in Asia Pacific.

The impact of acquiring these brands has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Asia Pacific operating segment.

Additionally, in January 2023, the Company refranchised our bottling operations in Vietnam.

The impact of this refranchising has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments and Asia Pacific operating segments for the six months ended June 28, 2024.

In January and February 2024, the Company refranchised our bottling operations in certain territories in India, and in February 2024, the Company refranchised our bottling operations in Bangladesh and the Philippines.

The impact of each of these refranchisings has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments and Asia Pacific operating segments for the three months ended March 29, 2024.

Beverage Volume

9 unchanged sentences

The unit case volume numbers used in this report are derived based on estimates received by the Company from its bottling partners and distributors.

Concentrate sales volume represents the amount of concentrates, syrups, source waters and powders/minerals (in all instances expressed in unit case equivalents) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.

For Costa non-ready-to-drink beverage products, concentrate sales volume represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in

unit case equivalents), sold by the Company to customers or consumers.

Concentrate sales volume represents the amount of concentrates, syrups,

source waters and powders/minerals (in all instances expressed in unit case equivalents) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.

For Costa non-ready-to-drink beverage products, concentrate sales volume represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in unit case equivalents), sold by the Company to customers or consumers.

Unit case volume and concentrate sales volume growth rates are not necessarily equal during any given period.

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Three Months Ended

March 29, 2024

June 28, 2024 Six Months Ended

June 28, 2024

Unit Cases 1,2,3

Concentrate Sales 4

Unit Cases 1,2,3

Concentrate Sales 4

Worldwide 2 % 5 % 6

15 unchanged sentences

As a result, the first quarter of 2024 had one less day when compared to the first quarter of 2023, and the fourth quarter of 2024 will have two additional days when compared to the fourth quarter of 2023.

5 After considering the impact of structural changes, unit case volume for Bottling Investments for the three months ended March 29, 2024 grew 8%.

6 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the three months ended March 29, 2024 declined 1%.

5 After considering the impact of structural changes, unit case volume for Bottling Investments for both the three and six months ended June 28, 2024 grew 7%.

6 After considering the impact of structural changes, worldwide concentrate sales volume for the three and six months ended June 28, 2024 grew 6% and 2%, respectively.

7 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the three and six months ended June 28, 2024 grew 7% and 3%, respectively.

Unit Case Volume

Although a significant portion of our Company’s net operating revenues is not based directly on unit case volume, we believe unit case volume performance is one of the indicators of the underlying strength of the Coca-Cola system because it measures demand for our products at the consumer level.

Unit case volume in Europe, Middle East and Africa increased 2%, which included 9% growth in water, sports, coffee and tea, and 2% growth in both sparkling flavors and juice, value-added dairy and plant-based beverages.

Three Months Ended June 28, 2024 versus Three Months Ended June 30, 2023

Unit case volume in Europe, Middle East and Africa was even, which included 5% growth in water, sports, coffee and tea, and 1% growth in sparkling flavors, offset by a 1% decline in Trademark Coca-Cola and a 3% decline in juice, value-added dairy and plant-based beverages.

The operating segment reported an increase in unit case volume of 5% in the Africa operating unit, offset by declines of 1% in the Europe operating unit and 2% in the Eurasia and Middle East operating unit.

Unit case volume in Latin America increased 5%, which included 6% growth in Trademark Coca-Cola, 5% growth in water, sports, coffee and tea, and 1% growth in both sparkling flavors and juice, value-added dairy and plant-based beverages.

operating segment’s volume performance included 6% growth in Mexico and 12% growth in Brazil, partially offset by a decline of 18% in Argentina.

Unit case volume in North America decreased 1%, which included a 5% decline in water, sports, coffee and tea, a 1% decline in Trademark Coca-Cola and a 2% decline in sparkling flavors, partially offset by 4% growth in juice, value-added dairy and plant-based beverages.

Unit case volume in Asia Pacific increased 3%, which included 8% growth in sparkling flavors and 4% growth in both Trademark Coca-Cola and juice, value-added dairy and plant-based beverages, partially offset by a 4% decline in water, sports, coffee and tea.

The operating segment’s volume performance included 15% growth in the India and Southwest Asia operating unit and 5% growth in both the ASEAN and South Pacific operating unit and Japan and South Korea operating unit, partially offset by a decline in unit case volume of 7% in the Greater China and Mongolia operating unit.

Unit case volume for Global Ventures increased 3%, driven by growth in energy drinks, partially offset by a 7% decline in water, sports, coffee and tea, and a 2% decline in juice, value-added dairy and plant-based beverages.

Unit case volume for Bottling Investments decreased 27%, driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.

Six Months Ended June 28, 2024 versus Six Months Ended June 30, 2023

Unit case volume in Europe, Middle East and Africa increased 1%, which included 7% growth in water, sports, coffee and tea, and 1% growth in sparkling flavors, partially offset by a 1% decline in juice, value-added dairy and plant-based beverages.

Unit case volume in Trademark Coca-Cola was even.

The operating segment reported an increase in unit case volume of 9% in the Africa operating unit, partially offset by a decline of 4% in the Eurasia and Middle East operating unit.

Unit case volume in the Europe operating unit was even.

Unit case volume in Latin America increased 4%, which included 5% growth in Trademark Coca-Cola, 4% growth in water, sports, coffee and tea, and 1% growth in sparkling flavors, partially offset by a 1% decline in juice, value-added dairy and plant-based beverages.

The operating segment’s volume performance included 9% growth in Brazil and 4% growth in Mexico, partially offset by a 23% decline in Argentina.

Unit case volume in North America was even, which included 5% growth in juice, value-added dairy and plant-based beverages and 1% growth in Trademark Coca-Cola, offset by a 5% decline in water, sports, coffee and tea.

Unit case volume in sparkling flavors was even.

Unit case volume in Asia Pacific decreased 2%, which included a 9% decline in water, sports, coffee and tea and a 1% decline in sparkling flavors, partially offset by 2% growth in Trademark Coca-Cola and 1% growth in juice, value-added dairy and plant-based beverages.

The operating segment reported a decline in unit case volume of 11% in the Greater China and Mongolia operating unit, partially offset by 7% growth in the ASEAN and South Pacific operating unit, 2% growth in the India and Southwest Asia operating unit and 1% growth in the Japan and South Korea operating unit.

Unit case volume for Global Ventures increased 1%, driven by 1% growth in juice, value-added dairy and plant-based beverages along with growth in energy drinks, partially offset by a 6% decline in water, sports, coffee and tea.

The operating segment reported an increase in unit case volume of 7% in the Africa operating unit, partially offset by declines of 2% in the Eurasia and Middle East operating unit and 1% in the Europe operating unit.

Unit case volume in Latin America increased 4%, which included 6% growth in Trademark Coca-Cola, 5% growth in water, sports, coffee and tea, and 1% growth in sparkling flavors.

Unit case volume in juice, value-added dairy and plant-based beverages was even.

The operating segment’s volume performance included 5% growth in Mexico and 10% growth in Brazil, partially offset by a 21% decline in Argentina.

Unit case volume in North America decreased 1%, which included a 5% decline in water, sports, coffee and tea, and a 1% decline in sparkling flavors, partially offset by 4% growth in juice, value-added dairy and plant-based beverages.

Unit case volume in Trademark Coca-Cola was even.

Unit case volume in Asia Pacific increased 1%, which included 4% growth in sparkling flavors, 3% growth in Trademark Coca-Cola and 2% growth in juice, value-added dairy and plant-based beverages, partially offset by a 7% decline in water, sports, coffee and tea.

The operating segment’s volume performance included 10% growth in the India and Southwest Asia operating unit, 6% growth in the ASEAN and South Pacific operating unit and 3% growth in the Japan and South Korea operating unit, partially offset by a decline in unit case volume of 9% in the Greater China and Mongolia operating unit.

Unit case volume for Global Ventures increased 2%, driven by growth in energy drinks, partially offset by a 6% decline in water, sports, coffee and tea.

Unit case volume in juice, value-added dairy and plant-based beverages was even.

Unit case volume for Bottling Investments decreased 17%, driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.

Concentrate Sales Volume

During the three months ended March 29, 2024, worldwide concentrate sales volume declined 2% and unit case volume increased 1% compared to the three months ended March 31, 2023.

During the three months ended June 28, 2024, worldwide concentrate sales volume increased 5% and unit case volume increased 2% compared to the three months ended June 30, 2023.

During the six months ended June 28, 2024, worldwide concentrate sales volume increased 1% and unit case volume increased 2% compared to the six months ended June 30, 2023.

Concentrate sales volume growth is calculated based on the amount sold during the reporting periods, which is impacted by the number of days.

1 unchanged sentence

The differences between concentrate sales volume and unit case volume growth rates for the operating segments were primarily due to the timing of concentrate shipments.

In addition, the first quarter of 2024 had one less day when compared to the first quarter of 2023, which also contributed to the differences between concentrate sales volume and unit case volume growth rates on a consolidated basis and for the individual operating segments.

We expect the differences between concentrate sales volume and unit case volume growth rates to lessen over the remainder of the year.

Net Operating Revenues

During the three months ended March 29, 2024, net operating revenues were $11,300 million, compared to $10,980 million during the three months ended March 31, 2023, an increase of $320 million, or 3%.

Three Months Ended June 28, 2024 versus Three Months Ended June 30, 2023

During the three months ended June 28, 2024, net operating revenues were $12,363 million, compared to $11,972 million during the three months ended June 30, 2023, an increase of $391 million, or 3%.

The following table illustrates, on a percentage basis, the estimated impact of the factors resulting in the increase (decrease) in net operating revenues on a consolidated basis and for each of our operating segments:

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Refer to the heading “Beverage Volume” above for additional information related to changes in our unit case and concentrate sales volumes.

“Price, product and geographic mix” refers to the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.

“Price, product and geographic mix” refers to the change in net operating revenues caused by factors such as pricing actions taken by the Company and, where applicable, our bottling partners;

the mix of categories, products and packages sold;

and the mix of channels and geographic territories where the sales occurred.

Management believes that providing investors with price, product and geographic mix enhances their understanding about the combined impact that these items had on the Company’s net operating revenues.

The impact of price, product and geographic mix is calculated by subtracting the change in net operating revenues resulting from volume increases or decreases, fluctuations in foreign currency exchange rates, and acquisitions and divestitures from the total change in net operating revenues.

Management believes that providing investors with price, product and geographic mix enhances their understanding about the combined impact that the following items had on the Company’s net operating revenues:

(1) pricing actions taken by the Company and, where applicable, our bottling partners;

(2) changes in the mix of products and packages

(3) changes in the mix of channels where products were sold;

and (4) changes in the mix of geographic territories where products were sold.

Management uses this measure in making financial, operating and planning decisions and in evaluating the Company’s performance.

1 unchanged sentence

Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

• Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing primarily in Nigeria, Türkiye and Zimbabwe, and favorable geographic mix;

• Latin America — favorable pricing initiatives, including inflationary pricing in Argentina, partially offset by unfavorable category mix;

• Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing primarily in Nigeria, Türkiye and Zimbabwe, and favorable category mix;

• Latin America — favorable pricing initiatives, including inflationary pricing in Argentina;

• North America — favorable pricing initiatives and favorable category mix, partially offset by unfavorable channel mix;

• Asia Pacific — favorable pricing initiatives, as well as favorable category, package and geographic mix;

• Asia Pacific — unfavorable geographic and category mix, partially offset by favorable pricing initiatives;

• Global Ventures — unfavorable product mix, partially offset by favorable pricing initiatives;

• Bottling Investments — favorable pricing initiatives across most markets and favorable product and package mix, partially offset by unfavorable geographic mix.

Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 6%.

• Bottling Investments — favorable pricing initiatives across most markets and favorable package and category mix, partially offset by unfavorable geographic mix.

Fluctuations in foreign currency exchange rates unfavorably impacted our consolidated net operating revenues by 6%.

This unfavorable impact was primarily due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Nigerian naira, Zimbabwean dollar and Turkish lira, which had an unfavorable impact on our Latin America and Europe, Middle East and Africa operating segments.

dollar compared to certain foreign currencies, including the Argentine peso, Nigerian naira, Zimbabwean dollar and Turkish lira, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

dollar compared to certain other foreign currencies, including the Mexican peso, Brazilian real, British pound and euro, which had a favorable impact on our Latin America, Global Ventures and Europe, Middle East and Africa operating segments.

dollar compared to certain other foreign currencies, including the Mexican peso and British pound, which had a favorable impact on our Latin America, Global Ventures and Europe, Middle East and Africa operating segments.

Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.

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Refer to the heading “Structural Changes, Acquired Brands and Newly Licensed Brands” above for additional information related to acquisitions and divestitures.

Six Months Ended June 28, 2024 versus Six Months Ended June 30, 2023

During the six months ended June 28, 2024, net operating revenues were $23,663 million, compared to $22,952 million during the six months ended June 30, 2023, an increase of $711 million, or 3%.

Percent Change 2024 versus 2023

Price, Product & Geographic Mix Foreign Currency Fluctuations Acquisitions & Divestitures 2

Consolidated 2 % 11 % (6) % (4) % 3 %

Europe, Middle East & Africa — 23 (21) — 2

Latin America 4 21 (10) — 15

North America — 9 — — 9

Asia Pacific 3 2 (5) 1 1

Global Ventures 2 (2) 1 — 2

Bottling Investments 7 6 (3) (26) (16)

Certain rows may not add due to rounding.

1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments and our Global Ventures operating segment (expressed in unit case equivalents) after considering the impact of acquisitions and divestitures, if any.

For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume computed by comparing the total sales (rather than the average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any.

Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only after considering the impact of structural changes, if any.

Refer to the heading “Beverage Volume” above.

2 Includes structural changes, if any.

Refer to the heading “Structural Changes, Acquired Brands and Newly Licensed Brands” above.

Refer to the heading “Beverage Volume” above for additional information related to changes in our unit case and concentrate sales volumes.

Price, product and geographic mix had an 11% favorable impact on our consolidated net operating revenues.

Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

• Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing primarily in Nigeria, Türkiye and Zimbabwe, and favorable geographic mix;

• Latin America — favorable pricing initiatives, including inflationary pricing in Argentina, partially offset by unfavorable category mix;

• North America — favorable pricing initiatives and favorable category mix, partially offset by unfavorable channel mix;

• Asia Pacific — favorable pricing initiatives and favorable package mix, partially offset by unfavorable geographic mix;

• Global Ventures — unfavorable product mix, partially offset by favorable pricing initiatives;

• Bottling Investments — favorable pricing initiatives across most markets and favorable package mix, partially offset by unfavorable geographic mix.

Fluctuations in foreign currency exchange rates unfavorably impacted our consolidated net operating revenues by 6%.

This unfavorable impact was primarily due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Nigerian naira, Zimbabwean dollar, Turkish lira and Japanese yen, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

Asia Pacific;

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.

Net operating revenue growth rates are impacted by sales volume;

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Management uses this measure in making financial, operating and planning decisions and in evaluating the Company’s performance.

Our gross profit margin increased to 62.5% for the three months ended March 29, 2024, compared to 60.7% for the three months ended March 31, 2023.

The increase was primarily due to the impact of favorable pricing initiatives and structural changes, partially offset by the unfavorable impact of foreign currency exchange rate fluctuations and higher commodity costs.

Our gross profit margin increased to 61.1% for the three months ended June 28, 2024, compared to 59.0% for the three months ended June 30, 2023.

Our gross profit margin increased to 61.8% for the six months ended June 28, 2024, compared to 59.8% for the six months ended June 30, 2023.

These increases were primarily due to the impact of favorable pricing initiatives and the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India, partially offset by the unfavorable impact of foreign currency exchange rate fluctuations and higher commodity costs.

Selling, General and Administrative Expenses

The following table sets forth the components of selling, general and administrative expenses (in millions):

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

Selling and distribution expenses $ 609 $ 682 $ 1,230 $ 1,336

3 unchanged sentences

Selling, general and administrative expenses $ 3,549 $ 3,321 $ 6,900 $ 6,506

During the three months ended March 29, 2024, selling, general and administrative expenses increased $166 million, or 5%, versus the prior year.

The increase was primarily due to higher advertising expenses, partially offset by a decrease in selling and distribution expenses.

During the three and six months ended June 28, 2024, selling, general and administrative expenses increased $228 million, or 7%, and increased $394 million, or 6%, respectively, versus the prior year.

The increases were primarily due to higher advertising expenses, partially offset by a decrease in selling and distribution expenses.

The decrease in selling and distribution expenses was primarily due to the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India.

During the three months ended March 29, 2024, foreign currency exchange rate fluctuations decreased selling, general and administrative expenses by 5%.

As of March 29, 2024, we had $389 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under our plans, which we expect to recognize over a weighted-average period of 1.9 years as stock-based compensation expense.

During both the three and six months ended June 28, 2024, foreign currency exchange rate fluctuations decreased selling, general and administrative expenses by 5%.

As of June 28, 2024, we had $363 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under our plans, which we expect to recognize over a weighted-average period of 1.8 years as stock-based compensation expense.

This expected cost does not include the impact of any future stock-based compensation awards.

1 unchanged sentence

Other operating charges incurred by operating segment and Corporate were as follows (in millions):

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

Europe, Middle East & Africa $ — $ — $ — $ —

6 unchanged sentences

Total $ 1,370 $ 1,338 $ 2,943 $ 1,449

During the three months ended March 29, 2024, the Company recorded other operating charges of $1,573 million.

These charges primarily consisted of $765 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, LLC (“fairlife”) in 2020, $760 million related to the impairment of our BodyArmor trademark and $36 million related to the Company’s productivity and reinvestment program.

In addition, other operating charges included $7 million of transaction costs related to the refranchising of our bottling operations in certain territories in India, $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $1 million related to tax litigation expense.

During the three months ended March 31, 2023, the Company recorded other operating charges of $111 million.

These charges primarily consisted of $62 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $27 million related to the Company’s productivity and reinvestment program and $18 million related to the restructuring of our North America operating unit.

In addition, other operating charges included $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition.

During the three months ended June 28, 2024, the Company recorded other operating charges of $1,370 million.

These charges primarily consisted of $1,337 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, LLC (“fairlife”) in 2020, $32 million related to the Company’s productivity and reinvestment program, and $3 million for the amortization of noncompete agreements related to the BodyArmor acquisition.

These charges were partially offset by a net benefit of $2 million related to a revision of management’s estimates for tax litigation expense.

During the six months ended June 28, 2024, the Company recorded other operating charges of $2,943 million.

These charges primarily consisted of $2,102 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, $760 million related to the impairment of our BodyArmor trademark and $68 million related to the Company’s productivity and reinvestment program.

In addition, other operating charges included $7 million of transaction costs related to the refranchising of our bottling operations in certain territories in India and $7 million for the amortization of noncompete agreements related to the BodyArmor acquisition.

These charges were partially offset by a net benefit of $1 million related to a revision of management’s estimates for tax litigation expense.

During the three months ended June 30, 2023, the Company recorded other operating charges of $1,338 million.

These charges primarily consisted of $1,262 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $35 million related to the discontinuation of certain manufacturing operations in Asia Pacific and $24 million related to the Company’s productivity and reinvestment program.

In addition, other operating charges included $8 million related to the restructuring of our North America operating unit, $6 million related to tax litigation expense and $3 million for the amortization of noncompete agreements related to the BodyArmor acquisition.

During the six months ended June 30, 2023, the Company recorded other operating charges of $1,449 million.

These charges primarily consisted of $1,324 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $51 million related to the Company’s productivity and reinvestment program and $35 million related to the discontinuation of certain manufacturing operations in Asia Pacific.

In addition, other operating charges included $26 million related to the restructuring of our North America operating unit, $7 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $6 million related to tax litigation expense.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the refranchising of our bottling operations in certain territories in India.

5 unchanged sentences

Information about our operating income contribution by operating segment and Corporate on a percentage basis is as follows:

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

Europe, Middle East & Africa 47.6 % 47.2 % 48.9 % 39.3 %

10 unchanged sentences

Information about our operating margin on a consolidated basis and for each of our operating segments and Corporate is as follows:

Three Months Ended

2024 March 31,

Three Months Ended Six Months Ended

2024 June 30,

2023 June 28,

2024 June 30,

Consolidated 21.3 % 20.1 % 20.2 % 25.1 %

7 unchanged sentences

* Calculation is not meaningful.

During the three months ended March 29, 2024, operating income was $2,141 million, compared to $3,367 million during the three months ended March 31, 2023, a decrease of $1,226 million, or 36%.

The decrease was driven by a decline in concentrate sales volume of 2%;

Three Months Ended June 28, 2024 versus Three Months Ended June 30, 2023

During the three months ended June 28, 2024, operating income was $2,632 million, compared to $2,401 million during the three months ended June 30, 2023, an increase of $231 million, or 10%.

The increase was driven by an increase in concentrate sales volume of 6% and favorable pricing initiatives.

These items were partially offset by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

higher commodity costs;

2 unchanged sentences

and an unfavorable foreign currency exchange rate impact of 16%.

These items were partially offset by favorable pricing initiatives.

During the three months ended March 29, 2024, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 7% due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar, Turkish lira, and Japanese yen, which had an unfavorable impact on our Latin America;

Fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 16% due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar and Turkish lira, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

and Asia Pacific operating segments.

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

dollar compared to certain other foreign currencies, including the Mexican peso, Brazilian real, and euro which had a favorable impact on our Latin America and Europe, Middle East and Africa operating segments.

dollar compared to certain other foreign currencies, including the Mexican peso, which had a favorable impact on our Latin America operating segment.

Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.

The Europe, Middle East and Africa operating segment reported operating income of $1,080 million and $1,135 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

The decrease in operating income was primarily driven by a decline in concentrate sales volume of 6%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 15%, partially offset by favorable pricing initiatives.

Latin America reported operating income of $942 million and $853 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

The increase in operating income was primarily driven by favorable pricing initiatives, partially

offset by a decline in concentrate sales volume of 1%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 7%.

Operating income for North America for the three months ended March 29, 2024 and March 31, 2023 was $445 million and $1,033 million, respectively.

The decrease in operating income was primarily driven by higher commodity costs, higher operating expenses and higher other operating charges due to the impairment of our BodyArmor trademark, partially offset by favorable pricing initiatives.

The Europe, Middle East and Africa operating segment reported operating income of $1,252 million and $1,133 million for the three months ended June 28, 2024 and June 30, 2023, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of 5% and favorable pricing initiatives, partially offset by higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 22%.

Latin America reported operating income of $920 million and $797 million for the three months ended June 28, 2024 and June 30, 2023, respectively.

The increase in operating income was primarily driven by an increase in concentrate sales volume of 9% and favorable pricing initiatives, partially offset by increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 13%.

Operating income for North America for the three months ended June 28, 2024 and June 30, 2023 was $1,312 million and $1,216 million, respectively.

The increase in operating income was primarily driven by favorable pricing initiatives, partially offset by a decline in concentrate sales volume of 1%, higher commodity costs, increased marketing spending and higher operating expenses.

Asia Pacific’s operating income for the three months ended June 28, 2024 and June 30, 2023 was $647 million and $673 million, respectively.

The decrease in operating income was primarily driven by higher commodity costs, increased marketing spending, the impact of acquired brands and structural changes, and an unfavorable foreign currency exchange rate impact of 7%, partially offset by an increase in concentrate sales volume of 7% and lower other operating charges.

Global Ventures’ operating income for the three months ended June 28, 2024 and June 30, 2023 was $92 million and $78 million, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of 3%, decreased marketing spending and a favorable foreign currency exchange rate impact of 1%, partially offset by higher operating expenses.

Bottling Investments’ operating income for the three months ended June 28, 2024 and June 30, 2023 was $98 million and $122 million, respectively.

The decrease in operating income was primarily driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

higher commodity costs;

higher operating expenses;

and an unfavorable foreign currency exchange rate impact of 3%, partially offset by unit case volume growth of 7% and favorable pricing initiatives.

Corporate’s operating loss for the three months ended June 28, 2024 and June 30, 2023 was $1,689 million and $1,618 million, respectively.

Operating loss in 2024 increased as a result of higher other operating charges primarily due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, partially offset by a favorable foreign currency exchange rate impact of 1%.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition.

Six Months Ended June 28, 2024 versus Six Months Ended June 30, 2023

During the six months ended June 28, 2024, operating income was $4,773 million, compared to $5,768 million during the six months ended June 30, 2023, a decrease of $995 million, or 17%.

The decrease was driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

higher commodity costs;

higher selling, general and administrative expenses;

higher other operating charges;

and an unfavorable foreign currency exchange rate impact of 11%.

These items were partially offset by an increase in concentrate sales volume of 2% and favorable pricing initiatives.

Fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 11% due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar and Turkish lira, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

dollar compared to certain other foreign currencies, including the Mexican peso, which had a favorable impact on our Latin America operating segment.

Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.

The Europe, Middle East and Africa operating segment reported operating income of $2,332 million and $2,268 million for the six months ended June 28, 2024 and June 30, 2023, respectively.

The increase in operating income was primarily driven by favorable pricing initiatives, partially offset by higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 18%.

Latin America reported operating income of $1,862 million and $1,650 million for the six months ended June 28, 2024 and June 30, 2023, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of 4% and favorable pricing initiatives, partially offset by higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 10%.

Operating income for North America for the six months ended June 28, 2024 and June 30, 2023 was $1,757 million and $2,249 million, respectively.

The decrease in operating income was primarily driven by higher commodity costs, increased marketing spending, higher operating expenses and higher other operating charges due to the impairment of our BodyArmor trademark, partially offset by favorable pricing initiatives.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the impairment of our BodyArmor trademark.

Asia Pacific’s operating income for the three months ended March 29, 2024 and March 31, 2023 was $654 million and $563 million, respectively.

The increase in operating income was primarily driven by favorable pricing initiatives, lower operating expenses and the impact of acquired brands and structural changes, partially offset by a decline in concentrate sales volume of 1%, higher commodity costs and increased marketing spending.

Global Ventures’ operating income for the three months ended March 29, 2024 and March 31, 2023 was $55 million and $51 million, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of 2%, lower commodity costs and a favorable foreign currency exchange rate impact of 3%, partially offset by higher marketing spending and higher operating expenses.

Bottling Investments’ operating income for the three months ended March 29, 2024 and March 31, 2023 was $156 million and $139 million, respectively.

The increase in operating income was primarily driven by unit case volume growth of 6% and favorable pricing initiatives, partially offset by higher commodity costs, higher operating expenses, an unfavorable foreign currency exchange rate impact of 3% and the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.

Corporate’s operating loss for the three months ended March 29, 2024 and March 31, 2023 was $1,191 million and $407 million, respectively.

Operating loss in 2024 increased primarily as a result of higher operating expenses, higher other operating charges due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, and an unfavorable foreign currency exchange rate impact of 1%.

Asia Pacific’s operating income for the six months ended June 28, 2024 and June 30, 2023 was $1,301 million and $1,236 million, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of 3%, favorable pricing initiatives, lower other operating charges, and the impact of acquired brands and structural changes, partially offset by higher commodity costs, increased marketing spending and an unfavorable foreign currency exchange rate impact of 4%.

Global Ventures’ operating income for the six months ended June 28, 2024 and June 30, 2023 was $147 million and $129 million, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of 2% and a favorable foreign currency exchange rate impact of 1%, partially offset by increased marketing spending and higher operating expenses.

Bottling Investments’ operating income for the six months ended June 28, 2024 and June 30, 2023 was $254 million and $261 million, respectively.

The decrease in operating income was primarily driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 3%, partially offset by unit case volume growth of 7% and favorable pricing initiatives.

Corporate’s operating loss for the six months ended June 28, 2024 and June 30, 2023 was $2,880 million and $2,025 million, respectively.

Operating loss in 2024 increased as a result of increased marketing spending, higher operating expenses and higher other operating charges primarily due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition.

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Interest Income

During the three months ended March 29, 2024, interest income was $246 million, compared to $168 million during the three months ended March 31, 2023, an increase of $78 million, or 46%.

The increase was primarily driven by higher average investment balances and higher returns on our Corporate and certain international investments.

During the three months ended June 28, 2024, interest income was $275 million, compared to $224 million during the three months ended June 30, 2023, an increase of $51 million, or 23%.

During the six months ended June 28, 2024, interest income was $521 million, compared to $392 million during the six months ended June 30, 2023, an increase of $129 million, or 33%.

The increases were primarily driven by higher average investment balances on our Corporate and certain international investments.

Interest Expense

During the three months ended March 29, 2024, interest expense was $382 million, compared to $372 million during the three months ended March 31, 2023, an increase of $10 million, or 3%.

The increase was primarily due to the impact of higher interest rates on short-term borrowings and derivative instruments compared to the prior year.

During the three months ended June 28, 2024, interest expense was $418 million, compared to $374 million during the three months ended June 30, 2023, an increase of $44 million, or 12%.

During the six months ended June 28, 2024, interest expense was $800 million, compared to $746 million during the six months ended June 30, 2023, an increase of $54 million, or 7%.

The increases were primarily due to the impact of higher debt balances and higher interest rates on derivative instruments compared to the prior year.

Equity Income (Loss) — Net

During the three months ended March 29, 2024, equity income was $354 million, compared to equity income of $275 million during the three months ended March 31, 2023, an increase of $79 million, or 29%.

The increase reflects, among other items, the impact of more favorable operating results reported by some of our equity method investees in the current year, a favorable foreign currency exchange rate impact, and a $57 million decrease in net charges resulting from the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.

Three Months Ended June 28, 2024 versus Three Months Ended June 30, 2023

During the three months ended June 28, 2024, equity income was $537 million, compared to equity income of $538 million during the three months ended June 30, 2023, a decrease of $1 million.

The decrease reflects, among other items, the impact of the sale of our ownership interest in certain of our equity method investees, a $22 million increase in net charges resulting from the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees and an unfavorable foreign currency exchange rate impact.

These unfavorable impacts were partially offset by the impact of more favorable operating results reported by certain of our equity method investees in the current year.

Six Months Ended June 28, 2024 versus Six Months Ended June 30, 2023

During the six months ended June 28, 2024, equity income was $891 million, compared to equity income of $813 million during the six months ended June 30, 2023, an increase of $78 million, or 10%.

The increase reflects, among other items, the impact of more favorable operating results reported by certain of our equity method investees in the current year and a $35 million decrease in net charges resulting from the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.

These items were partially offset by the impact of the sale of our ownership interests in certain of our equity method investees and an unfavorable foreign currency exchange rate impact.

Other Income (Loss) — Net

During the three months ended March 29, 2024, other income (loss) — net was income of $1,513 million.

Three Months Ended June 28, 2024 versus Three Months Ended June 30, 2023

During the three months ended June 28, 2024, other income (loss) — net was income of $2 million.

The Company recognized a net gain of $50 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, dividend income of $48 million and income of $13 million related to the non-service cost components of net periodic benefit cost.

Other income (loss) — net also included net foreign currency exchange losses of $64 million, an other-than-temporary impairment charge of $34 million related to an equity method investee in Latin America and $29 million of costs related to our trade accounts receivable factoring program.

During the three months ended June 30, 2023, other income (loss) — net was income of $91 million.

The Company recognized a net gain of $127 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, recognized net foreign currency exchange losses of $96 million, and recorded $20 million of costs related to our trade accounts receivable factoring program.

Additionally, other income (loss) — net included dividend income of $62 million and income of $12 million related to the non-service cost components of net periodic benefit cost.

Refer to Note 4 of Notes to Consolidated Financial Statements for additional information on equity and debt securities.

Refer to Note 14 of Notes to Consolidated Financial Statements for additional information on net periodic benefit cost or income.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the other-than-temporary impairment charge.

Refer to Note 17 of Notes to Consolidated Financial Statements for the impact that certain of these items had on our operating segments and Corporate.

Six Months Ended June 28, 2024 versus Six Months Ended June 30, 2023

During the six months ended June 28, 2024, other income (loss) — net was income of $1,515 million.

The Company recognized net gains of $599 million and $290 million related to the refranchising of our bottling operations in the Philippines and certain territories in India, respectively.

The Company also recognized a net gain of $516 million related to the sale of our ownership interest in an equity method investee in Thailand.

Additionally, the Company recognized a net gain of $178 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, recognized net foreign currency exchange losses of $68 million, and recorded $22 million of costs related to our trade accounts receivable factoring program.

Other income (loss) — net also included income of $15 million related to the non-service cost components of net periodic benefit cost, dividend income of $25 million and a loss of $7 million related to post-closing adjustments for the refranchising of our bottling operations in Vietnam in 2023.

During the three months ended March 31, 2023, other income (loss) — net was income of $615 million.

Additionally, the Company recognized a net gain of $228 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, dividend income of $73 million and income of $28 million related to the non-service cost components of net periodic benefit cost.

Other income (loss) — net also included net foreign currency exchange losses of $132 million, $51 million of costs related to our trade accounts receivable factoring program, an other-than-temporary impairment charge of $34 million related to an equity method investee in Latin America and a loss of $7 million related to post-closing adjustments for the refranchising of our bottling operations in Vietnam in 2023.

During the six months ended June 30, 2023, other income (loss) — net was income of $706 million.

The Company recognized a net gain of $439 million related to the refranchising of our bottling operations in Vietnam.

The Company recognized a net gain of $240 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, recognized net foreign currency exchange losses of $120 million, and recorded $31 million of costs related to our trade accounts receivable factoring program.

Additionally, other income (loss) — net included income of $13 million related to the non-service cost components of net periodic benefit cost and dividend income of $66 million.

Additionally, other income (loss) — net included dividend income of $128 million and income of $25 million related to the non-service cost components of net periodic benefit cost.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the refranchising of our bottling operations as well as the sale of our ownership interest in an equity method investee in Thailand.

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Refer to Note 14 of Notes to Consolidated Financial Statements for additional information on net periodic benefit cost or income.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the other-than-temporary impairment charge.

Refer to Note 17 of Notes to Consolidated Financial Statements for the impact that certain of these items had on our operating segments and Corporate.

The Company recorded income taxes of $687 million (17.7% effective tax rate) and $940 million (23.2% effective tax rate) during the three months ended March 29, 2024 and March 31, 2023, respectively.

The Company’s effective tax rates for the three months ended March 29, 2024 and March 31, 2023 vary from the statutory U.S.

The Company recorded income taxes of $627 million (20.7% effective tax rate) and $359 million (12.5% effective tax rate) during the three months ended June 28, 2024 and June 30, 2023, respectively.

The Company recorded income taxes of $1,314 million (19.0% effective tax rate) and $1,299 million (18.7% effective tax rate) during the six months ended June 28, 2024 and June 30, 2023, respectively.

The Company’s effective tax rates for the three and six months ended June 28, 2024 and June 30, 2023 vary from the statutory U.S.

federal tax rate of 21.0% primarily due to the tax impact of significant operating and nonoperating items, as described in Note 12 of Notes to Consolidated Financial Statements, along with the tax benefits of having significant earnings generated outside of the United States and significant earnings generated in investments accounted for under the equity method, both of which are generally taxed at rates lower than the statutory U.S.

federal tax rate.

The Company’s effective tax rates for the three and six months ended June 28, 2024 included $119 million and $60 million, respectively, of net tax expense related to various discrete tax items, including the resolution of certain foreign tax matters.

The Company’s effective tax rates for the three and six months ended June 30, 2023 included $120 million and $125 million, respectively, of net tax benefits related to various discrete tax items, including a change in tax law in a certain foreign jurisdiction.

On November 18, 2020, the U.S.

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The Company regularly reviews its optimal mix of short-term and long-term debt.

The Company’s cash, cash equivalents, short-term investments and marketable securities totaled $16.9 billion as of March 29, 2024.

In addition to these funds, our commercial paper program, and our ability to issue long-term debt, we had $4.6 billion in unused backup lines of credit for general corporate purposes as of March 29, 2024.

The Company’s cash, cash equivalents, short-term investments and marketable securities totaled $19.0 billion as of June 28, 2024.

These backup lines of credit expire at various times through 2028.

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In these factoring arrangements, for ease of administration, the Company collects customer payments related to the factored receivables and remits those payments to the financial institutions.

The Company sold $4,508 million and $2,709 million of trade accounts receivables under this program during the three months ended March 29, 2024 and March 31, 2023, respectively.

The costs of factoring such receivables were $22 million and $11 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

The Company sold $10,021 million and $7,197 million of trade accounts receivables under this program during the six months ended June 28, 2024 and June 30, 2023, respectively.

The costs of factoring such receivables were $51 million and $31 million for the six months ended June 28, 2024 and June 30, 2023, respectively.

The cash received from the financial institutions is reflected within the operating activities section of our consolidated statement of cash flows.

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During 2024, we expect to repurchase shares to offset dilution resulting from employee stock-based compensation.

During 2025, we expect to pay the remaining milestone payment related to the acquisition of fairlife.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.

We are currently in litigation with the IRS for tax years 2007 through 2009.

On November 18, 2020, the Tax Court issued the Opinion in which it predominantly sided with the IRS.

On November 8, 2023, the Tax Court issued a supplemental opinion, siding with the IRS in concluding both that the blocked-income regulations apply to the Company’s operations and that the Tax Court opinion in 3M Co.

On November 8, 2023, the Tax Court issued a supplemental opinion, siding with the IRS in concluding both that certain U.S.

tax regulations (known as the blocked-income regulations) that address the effect of certain Brazilian legal restrictions on royalty payments by the Company’s licensee in Brazil apply to the Company’s operations and that the Tax Court opinion in 3M Co.

Commissioner (February 9, 2023) controlled as to the validity of those regulations.

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Additional income tax and interest would continue to accrue until the time any such potential liability, or portion thereof, were to be paid.

The Company estimates the impact of the continued application of the Tax Court Methodology for the three months ended March 29, 2024 would increase the potential aggregate incremental tax and interest liability by approximately $500 million.

The Company estimates the impact of the continued application of the Tax Court Methodology for the three and six months ended June 28, 2024 would increase the potential aggregate incremental tax and interest liability by approximately $500 million and $1.0 billion, respectively.

The Company and the IRS are now in the process of agreeing on the tax impacts of the Opinions.

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Court of Appeals for the Eleventh Circuit.

The IRS can then seek to collect, and the Company expects to pay, any additional tax related to the 2007 through 2009 tax years reflected in the Tax Court decision (and interest thereon).

The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax years, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $5.9 billion (including interest accrued through March 29, 2024), plus any additional interest accrued through the time of payment.

The IRS will then seek to collect any additional tax related to the 2007 through 2009 tax years reflected in the Tax Court decision (and interest thereon).

The Company expects to pay such amounts at some point between the issuance of the Tax Court decision and the date the amounts are due pursuant to the notice of collection from the IRS and expects this to occur by the end of 2024.

The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax years, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $6.0 billion (including interest accrued through June 28, 2024), plus any additional interest accrued through the time of payment.

Some or all of this amount, plus accrued interest, would be refunded if the Company were to prevail on appeal.

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Cash Flows from Operating Activities

Net cash provided by operating activities during the three months ended March 29, 2024 and March 31, 2023 was $528 million and $160 million, respectively, an increase of $368 million, or 230%.

This increase was primarily driven by strong cash operating results, a benefit from the trade accounts receivable factoring program in the current year and a dividend payment from an equity method investee in Thailand.

The increase was also impacted by $167 million of the $275 million milestone payment for fairlife in the prior year.

These items were partially offset by an unfavorable impact due to foreign currency exchange rate fluctuations, higher tax payments and additional annual incentive payments in the current year due to improved business performance in the prior year.

Net cash provided by operating activities during the six months ended June 28, 2024 and June 30, 2023 was $4,113 million and $4,629 million, respectively, a decrease of $516 million, or 11%.

This decrease was primarily driven by an unfavorable impact due to foreign currency exchange rate fluctuations, higher tax payments and additional annual incentive payments in the current year due to improved business performance in the prior year.

In addition, the decrease was impacted by the timing of concentrate sales and marketing payments, and the prior year impact of working capital initiatives.

These items were partially offset by strong cash operating results, a dividend payment from an equity method investee in Thailand, payments in the prior year resulting from the buildup of inventory to manage potential supply chain disruptions, and $167 million of the $275 million milestone payment for fairlife in the prior year.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.

Cash Flows from Investing Activities

Net cash provided by investing activities during the three months ended March 29, 2024 and March 31, 2023 was $330 million and $117 million, respectively.

Net cash provided by investing activities during the six months ended June 28, 2024 was $997 million, and net cash used in investing activities during the six months ended June 30, 2023 was $766 million.

Purchases of Investments and Proceeds from Disposals of Investments

During the three months ended March 29, 2024, purchases of investments were $2,552 million and proceeds from disposals of investments were $444 million, resulting in a net cash outflow of $2,108 million.

During the three months ended March 31, 2023, purchases of investments were $739 million and proceeds from disposals of investments were $815 million, resulting in a net cash inflow of $76 million.

During the six months ended June 28, 2024, purchases of investments were $3,827 million and proceeds from disposals of investments were $2,662 million, resulting in a net cash outflow of $1,165 million.

During the six months ended June 30, 2023, purchases of investments were $2,103 million and proceeds from disposals of investments were $1,608 million, resulting in a net cash outflow of $495 million.

This activity primarily represents the purchases of, and proceeds from the disposals of, investments in marketable securities and short-term investments that were made as part of the Company’s overall cash management strategy.

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Proceeds from Disposals of Businesses, Equity Method Investments and Nonmarketable Securities

During the three months ended March 29, 2024 and March 31, 2023, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $2,893 million and $319 million, respectively.

The activity during the three months ended March 29, 2024 primarily related to sales of our ownership interests in certain equity method investees and the refranchising of certain of our bottling operations.

The activity during the three months ended March 31, 2023 primarily related to sales of our ownership interests in certain equity method investees.

During the six months ended June 28, 2024 and June 30, 2023, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $2,907 million and $320 million, respectively.

The activity during the six months ended June 28, 2024 primarily related to sales of our ownership interests in certain equity method investees and the refranchising of certain of our bottling operations.

The activity during the six months ended June 30, 2023 primarily related to sales of our ownership interests in certain equity method investees.

Refer to Note 2 of Notes to Consolidated Financial Statements.

Purchases of Property, Plant and Equipment

Purchases of property, plant and equipment during the three months ended March 29, 2024 and March 31, 2023 were $370 million and $276 million, respectively.

Collateral (Paid) Received Associated with Hedging Activities — Net

Collateral paid associated with our hedging activities during the three months ended March 29, 2024 was $105 million, and collateral received associated with our hedging activities during the three months ended March 31, 2023 was $18 million.

Refer to Note 6 of Notes to Consolidated Financial Statements for additional information on our hedging activities.

Purchases of property, plant and equipment during the six months ended June 28, 2024 and June 30, 2023 were $792 million and $615 million, respectively.

Other Investing Activities

During the six months ended June 28, 2024 and June 30, 2023, the total cash inflow was $127 million and $44 million, respectively.

The activity during the six months ended June 28, 2024 included the collection of $69 million of deferred proceeds related to the refranchising of our bottling operations in Vietnam.

Cash Flows from Financing Activities

Net cash provided by financing activities during the three months ended March 29, 2024 and March 31, 2023 was $406 million and $2,065 million, respectively.

Net cash used in financing activities during the six months ended June 28, 2024 and June 30, 2023 was $532 million and $998 million, respectively.

Loans, Notes Payable and Long-Term Debt

During the three months ended March 29, 2024, the Company had issuances of debt of $2,285 million, which included $2,221 million of issuances of commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of $64 million, net of related discounts and issuance costs.

The Company made payments of debt of $1,366 million during the three months ended March 29, 2024, which included $369 million of net payments of commercial paper and short-term debt with maturities of 90 days or less, payments of

$408 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $589 million.

During the six months ended June 28, 2024, the Company had issuances of debt of $6,832 million, which included $2,677 million of issuances of commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of $4,155 million, net of related discounts and issuance costs.

The Company made payments of debt of $4,734 million during the six months ended June 28, 2024, which included $1,117 million of net payments of commercial paper and short-term debt with maturities of 90 days or less, payments of $2,450 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $1,167 million.

Refer to Note 8 of Notes to Consolidated Financial Statements for additional information.

During the three months ended March 31, 2023, the Company had issuances of debt of $4,074 million, which included $2,725 million of net issuances of commercial paper and short-term debt with maturities of 90 days or less, $1,346 million of issuances of commercial paper and short-term debt with maturities greater than 90 days, and long-term debt issuances of $3 million, net of related discounts and issuance costs.

The Company made payments of debt of $1,174 million during the three months ended March 31, 2023, which included payments of $1,011 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $163 million.

During the six months ended June 30, 2023, the Company had issuances of debt of $4,638 million, which included $733 million of net issuances of commercial paper and short-term debt with maturities of 90 days or less, $3,892 million of issuances of

commercial paper and short-term debt with maturities greater than 90 days, and long-term debt issuances of $13 million, net of related discounts and issuance costs.

The Company made payments of debt of $2,366 million during the six months ended June 30, 2023, which included payments of $2,188 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $178 million.

On December 31, 2021, the United Kingdom’s Financial Conduct Authority, the governing body responsible for regulating the London Interbank Offered Rate (“LIBOR”), ceased to publish certain LIBOR reference rates.

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Issuances of Stock

The issuances of stock during the three months ended March 29, 2024 and March 31, 2023 were related to the exercise of stock options by employees.

The issuances of stock during the six months ended June 28, 2024 and June 30, 2023 were related to the exercise of stock options by employees.

Purchases of Stock for Treasury

During the three months ended March 29, 2024, the total cash outflow for treasury stock purchases was $702 million.

During the six months ended June 28, 2024, the total cash outflow for treasury stock purchases was $874 million.

The Company repurchased 12.9 million shares of common stock under the share repurchase plan authorized by our Board of Directors.

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In addition to shares repurchased under the share repurchase plan, the Company’s treasury stock activity included shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with so-called stock swap exercises of employee stock options and/or the vesting of restricted stock issued to employees.

The net impact of the Company’s issuances of stock and share repurchases during the three months ended March 29, 2024 resulted in a net cash outflow of $412 million.

During the three months ended March 31, 2023, the total cash outflow for treasury stock purchases was $848 million.

The net impact of the Company’s issuances of stock and share repurchases during the six months ended June 28, 2024 resulted in a net cash outflow of $437 million.

During the six months ended June 30, 2023, the total cash outflow for treasury stock purchases was $1,084 million.

The Company repurchased 16.1 million shares of common stock under the share repurchase plan authorized by our Board of Directors.

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The net impact of the Company’s issuances of stock and share repurchases during the three months ended March 31, 2023 resulted in a net cash outflow of $619 million.

During the three months ended March 29, 2024 and March 31, 2023, the Company paid dividends of $99 million and $101 million, respectively.

As a result of the timing of our quarterly reporting periods as well as our dividend payment dates, the Company paid substantially all of the 2023 and 2024 first quarterly dividends in the second quarter of each year.

Our Board of Directors approved the Company’s regular quarterly dividend of $0.485 per share at its May 2024 meeting.

This dividend is payable on July 1, 2024 to shareowners of record as of the close of business on June 14, 2024.

The net impact of the Company’s issuances of stock and share repurchases during the six months ended June 30, 2023 resulted in a net cash outflow of $725 million.

During the six months ended June 28, 2024 and June 30, 2023, the Company paid dividends of $2,184 million and $2,089 million, respectively.

As a result of the timing of our quarterly reporting periods as well as our dividend payment dates, the Company paid substantially all of the 2023 and 2024 second quarterly dividends in the third quarter of each year.

Our Board of Directors approved the Company’s regular quarterly dividend of $0.485 per share at its July 2024 meeting.

This dividend is payable on October 1, 2024 to shareowners of record as of the close of business on September 13, 2024.

Other Financing Activities

During the three months ended March 29, 2024 and March 31, 2023, the total cash outflow for other financing activities was $2 million and $115 million, respectively.

The cash outflow during the three months ended March 31, 2023 included $108 million of the $275 million milestone payment for fairlife.

During the six months ended June 28, 2024 and June 30, 2023, the total cash outflow for other financing activities was $9 million and $456 million, respectively.

The cash outflow during the six months ended June 30, 2023 included $108 million of the $275 million milestone payment for fairlife.

Additionally, the cash outflow during the six months ended June 30, 2023 included payments totaling $311 million of the purchase price of BodyArmor, which included amounts originally held back for indemnification obligations.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.

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Our foreign currency management program is designed to mitigate, over time, a portion of the potentially unfavorable impact of exchange rate fluctuations on our net income.

Taking into account the effects of our hedging activities, the impact of fluctuations in foreign currency exchange rates decreased our operating income for the three months ended March 29, 2024 by 7%.

Taking into account the effects of our hedging activities,

the impact of fluctuations in foreign currency exchange rates decreased our operating income for the three and six months ended June 28, 2024 by 16% and 11%, respectively.

Based on current spot rates and our hedging coverage in place, we expect foreign currency exchange rate fluctuations will have an unfavorable impact on operating income and cash flows from operating activities through the end of the year.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis